Thirani Chemicals Ltd. vs Deputy Commissioner of Income Tax

Madan B. Lokur, J.—On 24-2-2006, the following three substantial questions of law were framed for consideration:

Whether the appellant/assessee can rely upon the orders passed by the Tribunal previously after having made a concession before the Tribunal that the case in hand could be decided on merits independent of any such previous decisions?

Whether the Tribunal could have disagreed with the decision rendered earlier by a Co-ordinate Bench of the Tribunal in relation to another assessment year in the light of the concession made by the parties?

Whether ITAT was correct in law in holding that the expansion of the production capacity of the petitioners unit would not constitute setting up of an industrial undertaking eligible for the benefits of deduction under Sections 80HH and 80I of the Income Tax Act?

With regard to Question Nos. 1 and 2, there was a difference of opinion between the two learned Judges Constituting the Division Bench. Hon''ble Mr. Justice T.S. Thakur took the view that the two-Member Bench of the Income Tax Appellate Tribunal (''the Tribunal'') could have heard the appeal pertaining to the assessment year 1992-93 independently of the decision rendered by an earlier two-Member Bench in respect of the assessment year 1991-92 in view of the concession made by learned Counsel for the assessee before the Tribunal.

Hon''ble Mr. Justice Badar Durrez Ahmed took the view that the decision rendered by the Tribunal in respect of the assessment year 1991-92 could not have been overlooked while deciding the appeal for the assessment year 1992-93. Therefore, the matter ought to have been referred to a Larger Bench of the Tribunal in case the two-Member Bench of the Tribunal was not in agreement with the earlier view expressed in respect of the assessment year 1991-92.

In view of this difference of opinion, the matter has been listed before me for arguments.

The third question was not answered by the Division Bench of this Court in view of the difference of opinion.

To cut short the controversy and after discussing the matter with learned Counsel for both the parties, it appears that it would be appropriate to have the matter heard on the third question by a Larger Bench of the Tribunal because ex facie there are two conflicting views rendered by two Benches of the Tribunal consisting of two Members each. One Bench has decided in favour of the assessee while another has decided against the assessee. The controversy, therefore, needs to be resolved and judicial propriety requires that in a situation such as this the matter should be heard by a Larger Bench.

Under the circumstances, the two substantial questions that have been referred for decision are answered by holding that the appropriate course of action would be for Question No. 3, as framed on 24-2-2006 to be heard and decided by a three-Member Bench of the Tribunal.

It may be mentioned that in DLF Universal Ltd. Vs. Commissioner of Income Tax, it has been held by this Court that a co-ordinate Bench of the Tribunal cannot take a view contrary to a view expressed by an earlier Bench and it is bound by the decision of the co-ordinate Bench rendered earlier. In case the later Bench differs from the earlier decision, the only course open to it is to refer the matter to a Larger Bench. In this regard, reliance was placed on Sundarjas Kanyalal Bhathija and others Vs. The Collector, Thane, Maharashtra and others, Mahadeolal Kanodia Vs. The Administrator-general of West Bengal, . The matter, therefore, is no longer res Integra.

The appeal is disposed of accordingly.